Reference no: EM132579143

Question - On January 1, 2019, Pop Co. acquired 75% of the outstanding common shares of Soda Inc. for $161,250 cash. On that date, Soda had common shares of $156,250 and retained earnings of $31,250. At acquisition, the identifiable assets and liabilities of Soda had fair values that were equal to carrying amounts except for inventory, which had fair value $8,000 greater than carrying amount and plant and equipment, which had fair values $10,000 greater than carrying amounts. The plant and equipment had a remaining useful life of 5 years on January 1, 2019.Any goodwill will be tested yearly for impairment.

For 2019, Soda Inc. reported net income of $37,000 and paid dividends of $15,000.Pop Co. reported net income for 2019 of $50,000 and paid dividends of $25,000.

An impairment test on goodwill conducted on December 31, 2019, indicated that a $500 loss had occurred.

Under the equity method, what is the amount that Pop would report for "investment income" from Soda for the year ending December 31, 2019?